Budget Prep Continues

County administrator to create 2008 budget outlook based on different tax rates.

The circumstances surrounding the county's fiscal year 2008 budget became more complicated Tuesday, Dec. 5, as County Administrator Kirby Bowers presented the Board of Supervisors with an update of his Nov. 21 budget outlook. Bowers predicted Tuesday that keeping the tax rate at $.89 per $100 of real property value would now result in a shortfall of $113.7 million. The budget outlook was updated following Superintendent Edgar B. Hatrick's presentation, Nov. 28, of the 2008 schools operating budget to the School Board last week.

Nov. 21, Bowers had predicted a shortfall of $60.9 million. Bowers is still anticipating a 3 percent decrease in the residential home assessments beginning in January.

Only a few months ago, in July, assessments were predicted to increase and create more than $35 million in additional revenue for the county. Todd Kaufman, the county's assessor, said the projected increase included all classes of assessments, commercial and residential combined.

"When you look at everything together there will be a slight increase," Kaufman said.

In addition to changing the expected shortfall, Bowers adjusted the county's total budget to $32.2 million for 2008. The $4.8 million increase over the Nov. 21 presentation was due to a 3 percent cost of living adjustment for county employees, Bowers said.

"The $32.2 million county budget only includes those enhancements that are critical or that we will need due to new facilities opening," Bowers said.

UNDER THE CURRENT tax rate, Bowers predicted that $30.7 million in additional local tax money would go to the school system and $11.2 would go to the county's budget. A 9.2 cent tax rate would still allow for no change in the average resident's tax bill, Bowers said Tuesday, but under the new budget outlook, would yield only about $29.1 million in additional revenue. Nov. 21 Bowers said a tax rate of 9.65 cents would increase tax bill be about 5 percent.

At that rate, Bowers said during Tuesday's presentation, tax revenue would yield an additional $83.7 for the school system and $31.0 million for the county.

"I think even at the 5 percent increase it would be a strained budget scenario," he told the board.

IN HIS PRESENTATION during the board's Dec. 5 meeting, Bowers predicted that Hatrick's proposed budget would mean a $106.3 million increase in 2008 over fiscal year 2007's operating expenditures. That expenditure increase would require a $98.3 increase in local tax funding. Bowers had originally predicted a $90.8 million increase in expenditures for fiscal year 2008.

During a presentation Nov. 14, to the School Board, Hatrick proposed a $969.6 million Capital Improvement Program (CIP) between fiscal year 2008 and fiscal year 2012, requiring an additional $27.1 million in local tax money. The proposed program included $270.9 million in fiscal year 2008. The current fiscal year 2007-2012 CIP does not include any funding for school projects in 2008.

The Capital Improvement Program suggested by Hatrick would also add $261.1 million to the capital facilities plan through fiscal year 2012. In July, the board was told that $118.7 million remains in the debt capacity through that year. July's estimation included the road projects approved on the Nov. 7 bond referendum.

IN RESPONSE TO Bower's presentation the board directed the county administrator to create budget based on higher tax rates to give Supervisors a clearer picture of where the county stood.

"I think the board needs to have as much flexibility presented to us budget wise as possible," Supervisor Jim Burton (I-Blue Ridge) said. "A desired tax rate [of 89 cents] is certainly a valued input process. I myself think that by the time we examine the needs of the county that we are not going to wind up there, we are going to wind up somewhere higher than that."

Some Supervisors, however, remained steadfast in their commitment to an 89 cent tax rate.

"I knew going in that assessments would be expected to drop about 3 to 5 percent," Supervisor Mick Staton (R-Sugarland Run) said. "I am not going to look at the people in Loudoun County and say, 'Your home is now worth less than it was, but we are going to ask you to pay more.'"

SUPERVISORS ALSO expressed shock at the extent of Hatrick's proposed budget. Many said that while they understood money was needed to open new schools, they were taken aback at some of the enhancements the superintendent requested, such as back-up custodians.

"It is one thing to run a first-class ship, it is another thing to turn that ship into a full-sized yacht," Supervisor Bruce E. Tulloch (R-Potomac) said. Tulloch added that he hoped the superintendent would have a "reality check" and come back to the board with a budget that is more reasonable.

While Bowers will be creating alternate budgets at higher tax rates, the board has not directed him which tax rate to advertise to the public.